Aug. 13.
Upon consideration' of certain facts relating to one of China's most important industries—cotton—the foreign merchant may well wonder what his position is going to be after October 10. That is the official date for the abolition of likin, and on that occasion there will also be a revision of Customs duties, although in what respect it will operate has not been announced. The position of the cotton industry, in the drew stances, is worthy of study showing the rocks ahead on which local commerce may be wrecked, and it is little wonder that the foreign interests engaged in that industry are showing increasing—disquietude. After October 10 in addition to Customs duties a and an Internal Consumption Tax will be in force in order to enhance the revenue of the Government, and over and above these, it must be called to mind, it has for the past two or three years been a rule that goods leaving Shanghai pay duty for the privilege of going into the interior. So far so good, but then come imthe other forms of taxation to which such articles: as cotton yarn and cloth manufactured in Shanghai under foreign auspices have' recently. been subjected. The word foreign' pecially important in this case, for discrimination is being shown to the products of mills of purely Chinese ownership. While it is a well established economic axiom that the home market is the most important for any industry, it can here be shown that in' comparison with the foreign trade which has been built up, restraint is actually being imposed on the domestic side.
This condition of affairs com-merices with the desire of the Chinese Government to promote Home industries, for which purpose Nanking apparently solved to give Chinese manufacturers privileges not enjoyed by foreign mills in the country, notwithstanding that the latter employ a vast amount of Chinese labour as well as providing use for a great deal of Chinese capital at remunerative rates. The fact, however, that such cotton mills and factories are of foreign capitalization and maas agement—although in some cases merely nominal—is now debarring them from. what is known as the Privileged Factory Treatment under which Chinese products are freed from all internal taxation once a fee for this Privileged Factory Treatment has been paid, To quote instances of how foreign enterprise in the cotton industry of China-is being hampered, it has only to be pointed out that while such passes are issued to Chinese fit mis, some: by the Ministry of Finance, others by the Ministry of Commerce, Industry. and Labour, none are available for the products of foreign owned mills. Theoreti+ cally, it is true, these do not} confer any rights not enjoyed by foreign concerns, but in actual practice passes now being issued by Chinese mills having a photographic reproduction of the document from: either of the Ministries mentioned above, are, accepted by likin and other revenue barriers as valid. exemption certificates, no further duty being collected by the goods, covered by such passes.
While it is a laudable act of legislation—except in the eyes of doctrinaire Free Traders—to. give protection to Home industries in their. infant: stag such discrimination as th would not be countenanced by any economist. It is the sort of thing which calls forcible atten-Hon to the remarks made in a work entitled "The Cotton, Industry of Japan and China" by Mr. Amo S. Pearse, general secretary of the International Federation of Master Cotton Spinners' and Manufacturers'
Associations, Manchester. Two brief extracts from his book will suffice to indicate his conclusions with reference to China, "She (Japan) has incidentally taught the Chinese how to train the Chinese workpeople and how to manage mills, yet the Chines resent their coming and hope to tax. some day, these Japanese owned mills out of existence", And again:
"Shanghai is still the centre of the Chinese cotton mill: industry, and the mill owners are very: glad to avail themselves of the protoction of the Foreign Settlement during the present unsettled state of their own country, Several of the Chinese acknowledged re~ Tuctantly that without the foreigner at Shanghai neither they, nor their mills would be in existence, Here can be seen the real begi nings of the Home industry which the Chinese Government in theory desires to foster but which in practice it seems to-be endeavouring—to throttle. Economically the only: sound principle is to give these con cerns every opportunity, to pand, for they' are as much: domestic concern as the purely, capitalized Chines mills, and discrimination such as we have lown is in its very essence un~ sound as well. as being harmful: to the country's real interests:
Text read from the printed page and cleaned; old type leaves the occasional error.